Strategic Management

Strategic Management

Strategic Management

Introduction

Face book is a revolution of this era. Communication has become very fast because of Facebook. Facebook was launched in 2004, by Mark Zuckerburg a student of Harvard University. Facebook received immediate respond after its launch. In 24 hour, 1200 individuals from Harvard University signed up and the network was extended to Boston University and ultimately to all universities in US. The purchase of Facebook address domain for $200,000 made it spread worldwide in 2005. The network started reaching across national borders and bringing revolution to the communication system (Philliphs, 2007, p.n.d.). The site earns revenues through advertisements, whereas it is free for everyone to sign up. The website has features which are updated to provide users easy and interactive social networking. Users can develop classified advertisements and make pages for free.

The paper discusses the analytical frameworks to critically analyse the strategic capability of Facebook. The paper further discusses the conventional and contemporary models of strategy which can be applied on the strategic success of Facebook.

Discussion

Task A: Using relevant analytical frameworks critically analyse the strategic capability of Facebook

Strategic Capability

The term strategic capability means the resources, skills and capacity which create a long term competitive advantage for a company among others. The concept of strategic capability is attractive and gains the interest of many researchers. The concept explains the basis on which the competitiveness of the company depends. The basis for strategic capability is the purpose of the company and how does the company accomplish its activities. The strategic capability concept possesses dynamics such as the methods for creating revenues and profits for the company, the environment in which the company operates and the distinctive position company holds because of their success parameters (Ray, 2011, p.12). The company's success and failure depends upon the economic stability and the market demand conditions. Developing and implementing the correct framework enable the companies' high profits and growth. The framework of strategic capability embraces the opportunity identification steps of the company and managing business activities which result in success.

Porter's five forces model

Michael Porter's five competitive forces model which determines the competitiveness of a company against its competitor can be applied to Facebook (Ray, 2011, p.12). This model is significantly used in developing a framework for strategic decisions in the companies.

Threat of new potential entrants: These competitors are the firms which are not presently competing in the business but have prospects to if they get the opportunity. These potential competitors if enter the industry, create issues in sustaining the market share and influence the existing firms on reducing their cost. The new competitors can only enter if the industry has low or moderate entry barriers. The entry barriers include capital intensity, governmental regulations, high profit margins, cost advantage and customer switching.

The new competitors in the social network industry can easily enter, but Facebook has established a high customer loyalty among its user. Hence, it is very difficult for potential competitor to make users switch. The capital intensity is low and industry has high profit ...